Income tax exemptions for foreign workers a deviation from int’l norms – IMF report

Pull quote: “Guyana must fully tax income derived by an expatriate from employment.”

According to the Production Sharing Agreement (PSA) Guyana signed onto with ExxonMobil, there is an exemption from Personal Income Tax for expatriate/foreign employees of a contractor, affiliate, or non-resident subcontractor if the employee is not physically present in Guyana for more than 183 days.

But upon review of this provision, the International Monetary Fund (IMF) has told the government in no uncertain terms that this “is a departure from international norms under which the country where employment is exercised has full taxing rights over the employment income.”

The IMF subsequently recommended that Guyana’s authorities “fully tax income derived by an expatriate from employment exercised in Guyana.”
University of Houston Instructor, Tom Mitro, had also pointed out this issue to Guyana in a previous interview.

He described it as one of the most absurd provisions in Guyana’s agreement with ExxonMobil and its partners, Hess Corporation and CNOOC/NEXEN.
The Petroleum Consultant had said that Section 15.12 of the PSA which states that expatriates’ salaries are not subject to Income tax if they don’t spend more than 183 days in country is an old trick in the book. The company simply gets many expats to be in rotation to avoid going over the 183 days.

The Consultant stressed that most countries have plugged this tax avoidance loophole that companies have been abusing. He had advised that Guyana do the same.